PACRA Maintains the Entity Ratings of Mekotex (Pvt). Limited

Mekotex (Pvt.) Limited ("MPL" or "the Company") is an established player in Pakistan's competitive textile industry and operates as the flagship entity of the Mekotex Group. Over the years, the Company has strengthened its market position through strategic, phased expansion across the textile value chain, enabling it to offer integrated, one-window solutions to its customers. Equipped with state-of-the-art manufacturing facilities, the Company caters to leading customers by delivering premium-quality processed fabric, printed fabric and home textile products.

Lately, the sponsoring group underwent a comprehensive restructuring through a well-defined succession plan among the three sponsoring brothers and their respective families. As part of this strategic realignment, the domestic business relating to women's unstitched lawn dresses was carved out and transferred to Meko Fabrics (Pvt.) Limited. Meanwhile, the transfer of selected fixed assets to other group entities remains underway. As of today, the restructuring process is at an advanced stage and is awaiting the requisite approvals from the competent authorities. Management expects the restructuring to be completed by the end of FY27.

In parallel, management has shifted its strategic focus from a volume-driven growth model to a profitability-oriented business model. During 9MFY26, the Company achieved a topline of PKR 19.9bln (FY25: PKR 26.4bln). Continued efforts by the Research & Development (R&D) department to strengthen core profitability resulted in higher sales volume of processed fabric and discontinuation of contracts with low-margin customers. Furthermore, investments in renewable energy infrastructure, particularly the solar power project, contributed to optimizing the Company's overall cost structure. An easing monetary environment benefited profitability. This, however, was partially offset by the transition in the taxation regime. Consequently, the Company's profitability improved, with the PAT increasing to PKR 501mln during 9MFY26, compared to PKR 243mln in FY25.

The net working capital requirements of the Company are primarily fueled through short-term borrowings. The financial risk profile of the Company is adequate, with a slightly stretched working capital cycle depicting the industry norm. The cash flows and coverage ratios of the Company remained within a moderate range. On the sustainability front, management continues to invest in multiple initiatives aimed at enhancing operational efficiency and value-added offerings. The Company is establishing an embroidery unit, to be financed entirely through equity, thereby supporting its home textile segment. Furthermore, the planned installation of an additional 5MW solar power plant, complemented by a battery energy storage system, is expected to generate sustainable cost savings and strengthen the Company's energy self-sufficiency over the medium term.
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The ratings are dependent on the Company’s ability to sustain profitability while expanding the business operations. Going forward, the generation of sufficient cash flows and improvement in coverages remain essential, particularly amid the Group’s ongoing strategic transition. Adherence to sound credit quality metrics remains critical for the assigned ratings.

About the Entity
Mekotex (Pvt.) Limited, incorporated in 1991, is engaged in weaving, processing, digital printing, and stitching. The Company is wholly owned by members of the Majeed family through individual shareholdings. A majority stake (~48%) is held by Mr. Ashraf's immediate family, comprising his spouse, Ms. Almas (~21%), his son, Mr. Rayyan (~21%), and his daughter, Ms. Rabia (~6%). The remaining shareholding is held by Mr. Khalid (~36%) and Mr. Shoaib (~16%).